COURT OF APPEALS

DECISION

DATED AND FILED

January 25, 2022

Sheila T. Reiff

Clerk of Court of Appeals

NOTICE

This opinion is subject to further editing. If 

published, the official version will appear in 

the bound volume of the Official Reports. 

A party may file with the Supreme Court a 

petition to review an adverse decision by the 

Court of Appeals. See WIS. STAT. § 808.10 

and RULE 809.62. 

Appeal No. 2020AP1261 Cir. Ct. No. 2019CV6528

STATE OF WISCONSIN IN COURT OF APPEALS

DISTRICT I

JERNEB ACQUISITION CORP. II AND OAK CREEK ENTITIES, LLC,

PLAINTIFFS-APPELLANTS,

V.

PARTNER ASSESSMENT CORPORATION, D/B/A PARTNER ENGINEERING 

AND SCIENCE, INC.,

DEFENDANT-RESPONDENT.

APPEAL from an order of the circuit court for Milwaukee County: 

WILLIAM S. POCAN, Judge. Affirmed.

Before Donald, P.J., Dugan and White, JJ.

Per curiam opinions may not be cited in any court of this state as precedent 

or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).
No. 2020AP1261

2

¶1 PER CURIAM. Jerneb Acquisition Corp. II (Jerneb) and Oak 

Creek Entities, LLC (Oak Creek) appeal the circuit court order that stayed 

litigation and compelled arbitration of a dispute with Partner Assessment 

Corporation (Partner). The appellants argue that their claims sound in tort and are 

not tied to a contract with Partner, and that neither agency, nor corporate 

affiliation, nor assumption compel arbitration of their claims. We reject their 

arguments; accordingly, we affirm.

BACKGROUND

¶2 The following facts are drawn from the complaint and the motions 

before the circuit court. This case arises out of an engineering assessment that 

Partner conducted of a commercial shopping center in Oak Creek, Wisconsin (the 

Property). In July 2015, Time Equities, Inc. (Time Equities) was retained by 

Jerneb to act as its agent for the potential acquisition of the Property.1 Time 

Equities states that Partner is a full-service engineering, environmental, energy, 

and design consulting firm that works throughout the United States. Jerneb is 

engaged in the business of purchasing commercial real estate. Oak Creek is the 

current owner of the Property.

¶3 On August 31, 2015, Jerneb entered into a Purchase and Sale 

Agreement for the Property. The purchase agreement had a provision allowing 

Jerneb to “terminate the contract prior to closing” if problems were discovered 

during due diligence investigations, including Partner’s condition reports. As a 

 

1

 Jerneb explains that it is a related company created by certain principals of Time 

Equities. Time Equities is a full-service real estate firm actively involved in the development, 

conversion, and management of commercial, residential, and industrial properties throughout the 

United States. 
No. 2020AP1261

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result, Time Equities entered into a contract (the Agreement) with Partner on 

September 22, 2015, to assess and provide condition reports on the Property. 

Particularly relevant for this appeal the Agreement contained the following 

provision:

This Agreement shall be governed by ... the laws of the 

state of California. Any controversy, claim or action 

arising out of, or related to, this Agreement, the breach 

thereof, or the coverage of this arbitration provision shall 

be settled by arbitration which shall be conducted in the 

state of California in accordance with the Commercial 

Arbitration rules of the American Arbitration Association[.]

Pursuant to the Agreement, Partner produced several reports for Time Equities,

including a Property Condition Assessment and a Phase I Environmental Site 

Assessment (collectively, the Reports). Time Entities contends that in the Reports, 

Partner made a number of false statements of facts about the Property that were 

not true and concealed the property’s true condition.

¶4 At the closing on November 18, 2015, Jerneb assigned its rights and 

responsibilities to four LLCs,2 which then took title to the Property as tenants-incommon.3

 Shortly after the LLCs took possession of the Property, substantial 

 

2

 The four LLCs were business entities related to Time Equities and were composed of 

Oak Creek Air Bay LLC, Oak Creek NYF Properties LLC, Oak Creek TEI Equities LLC, and 

Oak Creek Austell LLC (collectively, the “LLCs”).

3

 Jerneb explained in its complaint that as is the custom and practice of Time Equities

and its principals, on the closing date, Jerneb assigned its rights and responsibilities under the 

purchase agreement to the LLCs, who simultaneously closed on the purchase agreement and 

acquired the Property. The LLCs were funded by Time Equities-related entities to 

simultaneously close on the purchase agreement and acquire the Property. Thus, on November 

18, 2015, the LLCs took title to the Property. Later, on or about June 15, 2018, the LLCs merged 

and their tenancy-in-common interests in the Property (and other properties) were vested in and 

with Oak Creek.
No. 2020AP1261

4

settlement and environmental issues were discovered at the site that were not 

disclosed in the Reports.

¶5 In March 2017, Time Equities initiated arbitration against Partner in 

California over allegations that the Reports failed to disclose these issues with the 

Property. Time Equities’ Statement of Claims in December 2017 included breach 

of contract, false promise/promissory fraud, negligent misrepresentation, and 

professional negligence. In March 2018, Partner moved for summary judgment in 

the arbitration against Time Equities, arguing that Jerneb and the LLCs were 

necessary parties to the arbitration because they were the actual purchasers. In 

April 2018, the arbitration panel denied Partner’s motion without prejudice, in part 

because whether Time Equities “can prove damages associated with the causes of 

action in the Statement of Claims or the joinder of any necessary parties 

remain[ed] to be decided.”

¶6 Time Equities moved to amend its Statement of Claims, asserting 

that Time Equities could bring claims for itself and as an agent for Jerneb and the 

LLCs. After a hearing in July 2018, the arbitration panel denied Time Equities’

motion to amend as to Time Equities’ standing to bring damages on behalf of 

Jerneb or the LLCs because under California law, “every action must be brought 

in the name of the real party in interest.” CAL. CIV. PROC. CODE § 367. The panel 

further concluded that exculpatory clauses limiting exemplary damages and 

capping aggregate liability at one million dollars in damages were both 

enforceable, and it granted Time Equities’ motion to amend to bring a claim for 

fraud. 

¶7 In August 2019, Jerneb and Oak Creek filed the underlying 

complaint against Partner, which alleged professional negligence, fraudulent 
No. 2020AP1261

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inducement, and fraud. In May 2020, Partner moved the circuit court to stay the 

litigation pursuant to WIS. STAT. § 788.02 (2019-20),

4

and compel Jerneb and Oak 

Creek to arbitrate their claims in California, or in the alternate, dismiss the action 

for failing to state a claim upon which relief can be granted, pursuant to WIS.

STAT. § 802.06(2)(a)6.

¶8 On July 1, 2020, the circuit court held a hearing on Partner’s motion, 

and after oral argument, granted the motion to stay the litigation and compel the 

parties to arbitrate. The court concluded that Oak Creek was an undisclosed 

principal to the contract between Time Equities and Partner and that “[e]ven 

though [Time Equities] was not Oak Creek’s agent at the time Jerneb and the other 

[LLCs] acquired the property, Oak Creek can be bound by the agreement because 

the [LLCs] merged their interests in the property with Oak Creek.” The court 

rejected Time Equities’ analysis of the April and July 2018 arbitration panel 

orders; Time Equities had claimed to the court that the arbitration panel barred 

Jerneb and Oak Creek from joining the arbitration. The circuit court found that 

overall the arbitration panel orders do not state “that the arbitration panel was 

rejecting plaintiffs from joining the arbitration because they were not signatories 

to the agreement.” The circuit court concluded that if Jerneb and Oak Creek “join 

the arbitration on their own behalf, they should be able to recover damages for 

themselves.” Finally, the court concluded that the direct benefits estoppel doctrine 

would apply.

¶9 This appeal follows.

 

4

 All references to the Wisconsin Statutes are to the 2019-20 version unless otherwise 

noted.
No. 2020AP1261

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DISCUSSION

¶10 Jerneb and Oak Creek argue that the circuit court erred when it 

compelled arbitration because they were not bound to the contract, much less its

arbitration provision, under contract law principles of agency, corporate affiliation, 

or assumption/merger. To the contrary, Partner argues that Jerneb and Oak Creek 

are bound to the arbitration clause in the Agreement under contract law principles 

including agency and assumption. Further, Partner argues that Jerneb and Oak 

Creek’s claims are arbitrable. On the other hand, Jerneb and Oak Creek assert 

that, under the law of the case, the circuit court erred to compel arbitration because 

it was implicit in the arbitration panel decision that Jerneb and Oak Creek cannot 

join the arbitration. Moreover, because Partner’s position to the arbitration panel 

was that Time Equities could not claim Jerneb and Oak Creek’s damages as its 

agent, they contend that Partner is attempting to take inconsistent positions about 

agency. Finally, they argue that the direct benefits estoppel doctrine has not been 

adopted in Wisconsin and that, in any case, the doctrine does not apply.

¶11 The threshold question before us is whether Jerneb and Oak Creek

are bound by the arbitration clause in the Agreement between Time Equities and 

Partner, even though Jerneb and Oak Creek were not signatories to the Agreement. 

Jerneb and Oak Creek contend that the arbitration clause does not apply to their 

claims because their claims arise from tort and Partner’s general professional duty,

and they are not parties to the Agreement. In contrast, Partner argues that Jerneb 

and Oak Creek are required by contract to arbitrate these claims. We first address 

whether Jerneb and Oak Creek are bound by the Agreement. We then address 

whether the arbitration clause applies to their claims. 
No. 2020AP1261

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¶12 The Wisconsin Arbitration Act, chapter 788 of the Wisconsin 

Statutes, “sets out the parameters for an arbitration proceeding.” Employers Ins. 

of Wausau v. Jackson, 190 Wis. 2d 597, 611, 527 N.W.2d 681 (1995). The 

circuit court plays a limited role with regard to issues concerning arbitration; 

however, a court “determine[s] in the first instance whether the parties agreed to 

arbitrate.” Midwest Neurosciences Assocs., LLC v. Great Lakes Neurosurgical 

Assocs., LLC, 2018 WI 112, ¶46, 384 Wis. 2d 669, 920 N.W.2d 767. The circuit 

court stayed litigation and compelled arbitration pursuant to WIS. STAT. § 788.02, 

which provides that:

If any suit or proceeding be brought upon any issue 

referable to arbitration under an agreement in writing for 

such arbitration, the court in which such suit is pending, 

upon being satisfied that the issue involved in such suit or 

proceeding is referable to arbitration under such an 

agreement, shall on application of one of the parties stay 

the trial of the action until such arbitration has been had in 

accordance with the terms of the agreement, providing the 

applicant for the stay is not in default in proceeding with 

such arbitration.

“The application of [WIS. STAT. §] 788.02 [to stay litigation and compel 

arbitration] to undisputed facts involves a question of law which we review 

without deference to the trial court.” Meyer v. Classified Ins. Corp. of Wis., 179 

Wis. 2d 386, 392, 507 N.W.2d 149 (Ct. App. 1993). “[A] petition to compel 

arbitration involves contract interpretation, which is a question of law that we 

review de novo.” First Weber Grp., Inc. v. Synergy Real Est. Grp., LLC, 2015 

WI 34, ¶20, 361 Wis. 2d 496, 860 N.W.2d 498.

¶13 We first consider the question of whether or how Jerneb and Oak 

Creek, as non-signatories to the Agreement, could be bound by the Agreement and 

thus required to arbitrate their claims. Partner argues that Jerneb and the LLCs are 

bound by agency principles and that Oak Creek is bound by assumption. 
No. 2020AP1261

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“[A]rbitration is a matter of contract and, as such, no party can be required to 

submit to arbitration any dispute which he or she has not agreed to submit.” Cirilli 

v. Country Ins. & Fin. Servs., 2009 WI App 167, ¶12, 322 Wis. 2d 238, 776 

N.W.2d 272.5

¶14 We begin with Jerneb and the LLCs. In their complaint, Jerneb and 

the LLCs made numerous claims that Time Equities was acting as their agent in 

the contractual relationship with Partner.6 Because they were not named in the 

 

5

 The Supreme Court of the United States held that “a litigant who was not a party to the 

relevant arbitration agreement may invoke § 3 [of the FAA] if the relevant state contract law 

allows him to enforce the agreement.” Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 632

(2009). Agency and assumption are among “the list of state law doctrines governing when a nonsignatory may be bound to arbitration.” Scheurer v. Fromm Fam. Foods LLC, 863 F.3d 748, 

753 (7th Cir. 2017). 

6

 At least five times in the complaint, Jerneb and Oak Creek stated that Time Equities

acted as their agent in the Agreement and in the purchase of the Property. 

Partner undertook an assessment of the property and 

provided a number of reports to its customer, Time Equities, 

Inc., acting as agent for Plaintiffs. 

....

Jerneb ... retained Time Equities, Inc. (“TE”) to act as 

Jerneb’s agent for ... due diligence relating to the potential 

acquisition of the Oak Creek Centre[.] 

....

Acting as agent for Jerneb and the LLC’s, and as part of 

its duties in performing due diligence on the Property, TE 

contacted Partner and requested Partner’s services in providing 

multiple equity-level assessments and surveys of the Property.

....

Acting as Jerneb’s and the LLC’s agent, TE 

subsequently accepted Partner’s Proposal[.] 

....

(continued)
No. 2020AP1261

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Agreement and the record reflects that the Agreement was made for their benefit, 

Jerneb and the LLCs were undisclosed principals of the Agreement between

Partner and Time Equities, their agent. “An undisclosed principal is bound by 

contracts and conveyances made on his account by an agent acting within his 

authority.” Bourdo v. Preston, 259 Wis. 97, 100, 47 N.W.2d 439 (1951) (citation 

omitted); Indiana Gas Co. v. Home Ins. Co., 141 F.3d 314, 319 (7th Cir. 1998) 

(explaining that both the agent and an undisclosed principal are bound by a 

contract). Therefore, we conclude that an agency relationship existed and under 

contract law, Jerneb and the LLCs, as undisclosed principals, were bound under 

the Agreement. 

¶15 Nevertheless, the LLCs no longer exist. Oak Creek was created by 

the merger of the LLCs, which were then dissolved after Oak Creek was created 

and took ownership of the Property. Oak Creek is bound by the Agreement 

because the LLCs were bound. Oak Creek takes on these obligations because it 

has assumed the LLCs’ obligations by the merger formation. The obligations of a 

successor company will continue when a transaction constitutes a merger of 

multiple business entities. See Sedbrook v. Zimmerman Design Grp., Ltd., 190 

Wis. 2d 14, 20, 526 N.W.2d 758 (Ct. App. 1994). We accept the characterization 

provided by Jerneb and Oak Creek in the complaint, where they state that Oak 

Creek was formed as a result of the merger of the LLCs as follows:

Oak Creek Entities is the successor by merger of Oak 

Creek Air Bay LLC, Oak Creek NYF Properties LLC, Oak 

Creek TEI Equities LLC and Oak Creek Austell LLC. 

Jerneb assigned its right to purchase the Property to Oak 

Creek Air Bay LLC, Oak Creek NYF Properties LLC, Oak 

 

Partner made these promises intending to induce TE, 

acting as agent for Plaintiffs, to agree to the Proposal[.] 
No. 2020AP1261

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Creek TEI Equities LLC and Oak Creek Austell LLC, who 

did so. 

Therefore, under Wisconsin law, the merger of the LLCs into Oak Creek 

establishes that it would assume the same obligations under the Agreement as did 

the LLCs as undisclosed principals of their agent, Time Equities. Therefore, we 

conclude that Oak Creek was bound under the Agreement. 

¶16 We next turn to the question of whether Jerneb and Oak Creek’s 

claims are arbitrable. The Agreement’s arbitration clause states that “[a]ny 

controversy, claim or action arising out of, or related to, this Agreement, the 

breach thereof, or the coverage of this arbitration provision shall be settled by 

arbitration....” Jerneb and Oak Creek contend that their claims do not arise out of 

the Agreement. They assert that Partner breached its common-law duty of 

professional care as an engineering firm; that its proposal to Time Equities 

fraudulently induced Jerneb to enter the purchase agreement, and it made 

materially false or misleading statements in the Reports. This argument fails.

¶17 Although tort and contract claims are generally separate, “a contract 

may create the state of things which furnishes the occasion of a tort.” Colton v. 

Foulkes, 259 Wis. 142, 146-47, 47 N.W.2d 901 (1951). “[T]here must be a duty 

existing independently of the performance of the contract for a cause of action in 

tort to exist.” Landwehr v. Citizens Tr. Co., 110 Wis. 2d 716, 723, 329 N.W.2d 

411 (1983). That tort liability may arise out of a contractual relationship does not 

negate that a contractual relationship exists or contract obligations continue. 

See id. at 721-22. Further, the characterization of a claim does not determine its 

arbitrability, which is instead based “upon the relationship of the claim to the 

subject matter of the arbitration clause. Were the rule otherwise, a party could 

frustrate any agreement to arbitrate simply by the manner in which it framed its 
No. 2020AP1261

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claims.” Amoco Transp. Co. v. Bugsier Reederei & Bergungs, A.G., 659 F.2d 

789, 794 (7th Cir. 1981).

¶18 A party may not avoid a contractual arbitration clause merely by 

casting its complaint in tort. See Fyrnetics (Hong Kong) Ltd. v. Quantum Grp., 

Inc., 293 F.3d 1023, 1030 (7th Cir. 2002).7 Where an arbitration clause states that 

it applies to claims “arising out of” a contract, the clause “reaches all disputes 

having their origin or genesis in the contract, whether or not they implicate 

interpretation or performance of the contract per se.” Sweet Dreams Unlimited, 

Inc. v. Dial-A-Mattress Int’l, Ltd., 1 F.3d 639, 642 (7th Cir. 1993). The 

Agreement requires arbitration of any claim “arising out of” the Agreement. 

Despite Jerneb and Oak Creek’s argument that their claims against Partner sound 

in common-law tort, they have failed to identify a legal duty on Partner’s part that 

was breached independent of the contractual relationship. Jerneb and Oak Creek’s 

claims arise out of the Agreement because without the Agreement, Partner would 

not have conducted the assessment and issued the Reports upon which Jerneb and 

 

7

 The Seventh Circuit rejected the attempt of a licensee of a carbon monoxide sensor 

manufacturer to avoid arbitration by casting its complaint in tort. 

[The licensee] seems to imply that because its claims 

arose exclusively from [the defendant licensor’s] allegedly 

tortious conduct, its claims arise in tort and therefore should not 

be bound by contract terms. It is nonsensical for [the licensee] to 

argue that its claims are not arising “in connection with the 

license agreement.” The license agreement specifically 

permitted [licensees] “to make, have made, use, import, export, 

sell, or offer to sell” products containing [licensor’s carbon 

monoxide] sensor.... The fact that [one appellant] cast its 

complaint in tort does not allow it to avoid its contractual 

obligation to arbitrate. 

Fyrnetics (Hong Kong) Ltd. v. Quantum Grp., Inc., 293 F.3d 1023, 1030 (7th Cir. 2002).
No. 2020AP1261

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Oak Creek’s claims are based. Therefore, we conclude that these claims are 

arbitrable.

¶19 Next, we consider Jerneb and Oak Creek’s argument that the law of 

the case doctrine applies to these claims. Generally, “a decision on a legal issue 

by an appellate court establishes the law of the case, which must be followed in all 

subsequent proceedings in the trial court or on later appeal.” Univest Corp. v. 

General Split Corp., 148 Wis. 2d 29, 38, 435 N.W.2d 234 (1989). Here, Jerneb 

and Oak Creek take the same position they took at the circuit court, namely that 

the arbitration panel refused to allow them to join the arbitration. Our review of 

the arbitration panel orders and the record shows that the arbitration panel’s orders 

do not establish that Jerneb and Oak Creek would not be allowed to join the 

arbitration in their own stead. The arbitration panel order from July 2018 stated:

Time Equities has presented no authority, under facts 

similar to this case, for the proposition an agent can bring 

an action on behalf of a principal and recover damages for 

itself although the damages actually were incurred by the 

principal. Indeed, in California, every action must be 

brought in the name of the real party in interest. 

....

In this arbitration, the real parties in interest are the 

LLCs who claim to be damaged from conduct of Partner. 

Because the LLCs are the real party in interest, Time 

Equities may not recover damages on their behalf. 

Thus the order only bars Time Entities from attempting to claim Jerneb and Oak 

Creek’s damages—it does not determine any issue about whether Jerneb and Oak 

Creek could intervene in the arbitration or initiate arbitration on their own behalf. 

Nothing in the record supports an application of the law of the case doctrine to this 

decision. See Schimmels v. Noordover, 2006 WI App 7, ¶17, 288 Wis. 2d 790, 

709 N.W.2d 466. 
No. 2020AP1261

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¶20 Finally, Jerneb and Oak Creek argue that Partner has taken

inconsistent positions on agency, with Partner arguing to the arbitration panel that

Time Equities does not have standing to bring Jerneb and Oak Creek’s damages 

claims as their agent, while also arguing to the circuit court and this court that 

agency principles bind Jerneb and Oak Creek to the Agreement. We reject this 

argument, and we conclude there is no inconsistency. The arbitration panel order 

clearly stated that California law required a party to bring its own damages claim. 

Wisconsin law on agency and undisclosed principals establish that Jerneb and Oak 

Creek (through the LLCs) are bound by the Agreement. See Indiana Gas Co., 

141 F.3d at 319. Being bound by the Agreement through agency does not 

preclude a party from being required to bring its own claims for damages. 

CONCLUSION

¶21 We conclude that Jerneb and Oak Creek’s claims are properly 

subject to arbitration under the terms of the Agreement. We conclude that Jerneb 

and the LLCs were undisclosed principals of Time Equities and are bound to 

arbitrate their claims that arose out of the Agreement through the principle of 

agency. Because Oak Creek is the product of the merger of the LLCs, we 

conclude that Oak Creek assumed the obligations of the LLCs and is bound to the 

Agreement and its arbitration clause. We agree with the circuit court that the 

arbitration panel orders do not bar Jerneb or Oak Creek from joining the

arbitration in their individual capacities. We reject Jerneb and Oak Creek’s 

position that the law of the case doctrine directs our decision. Because these 

conclusions are dispositive to the issue before us, we decline to address the 

doctrine of direct benefit estoppel. See Barrows v. American Fam. Ins. Co., 2014 

WI App 11, ¶9, 352 Wis. 2d 436, 842 N.W.2d 508 (“An appellate court need not 

address every issue raised by the parties when one issue is dispositive.”).
No. 2020AP1261

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By the Court.—Order affirmed.

This opinion will not be published. See WIS. STAT.

RULE 809.23(1)(b)5.